Susan Dziubinski: I m Susan Dziubinski with Morningstar. U.S. large-cap growth stocks have largely been market darlings. Joining me today to discuss some ETF ideas that are maybe in some less popular categories is Ben Johnson. Ben is Morningstar s global director of ETF research. Hi, Ben. Thank you for being here today. Ben Johnson: Hi, Susan. Thanks for having me. Dziubinski: Now, one certainly less popular area of the market has been U.S. small-value stocks. Can you talk a little bit about why they ve been less popular and have been underperforming? Johnson: Well, in a word, it s performance, and in two words, it s been really lousy performance. I guess, that s three words. But over the course of the past decade, what we ve seen is that the Morningstar U.S. Large Growth index has gained 17% annually. Over that same span, the Morningstar U.S. Small Value index is up just 8% a year. And that spread has really only widened in recent years. So, if we look back just over the pas
Strong run for small-cap stocks is just getting started
Small-cap stocks, which tend to be more cyclical and more volatile, have eclipsed the performance of the stocks of larger companies by most measures over the past nine months. Progress on a COVID vaccine and the reopening of the economy bodes well for more big gains by small-cap funds this year.
January 11, 2021 4 MINS
Small-cap stocks’ impressive rally off the March 2020 low should have financial advisers rethinking portfolio allocations heading into a year in which smaller companies could continue to lead.
The key, however, will be choosing wisely between active and passive strategies, and even being selective among the index fund offerings.
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